Bnp Paribas has listed 20 new certificates on the SeDeX, dubbed “Premi Fissi Cash Collect Callable”, with a biennial expiration date of August 15, 2028. These certificates are linked to baskets of the “Worst of” type and offer a cedolare return.
The effective duration of the investment will depend on the issuer’s discretionary power to recall the products early, starting from February 15, 2027, with a minimum notice period of three working days.
Certificates have distinct characteristics. They will pay unconditional fixed premiums on a monthly basis, starting from October 6, ranging from 0.88% (10.56% per annum) for the certificate on Enel, Eni, and Unicredit, to 1.85% (22.20% per annum) for the certificate on Intel, Marvell Technology, and Sandisk.
In the event of an early recall, the investment will be liquidated at its nominal value of 100 euros.
The barrier for these certificates ranges from 20% to 60%, with the Cash Collect on Intel, Marvell Technology, and Sandisk having the lowest barrier and the highest premium, due to the high volatility of the underlying stocks, such as those found in a hybrid portfolio.
Risk and return are closely tied. In a strongly negative market scenario, the investment can still guarantee the payment of monthly coupons, providing a protective cushion in case the barrier is breached.
If none of the stocks in the basket close below the predetermined barrier, the certificate will be redeemed at its nominal value.
However, if any of the underlying stocks incur a loss exceeding the barrier, the certificate will reimburse an amount commensurate with the worst-performing stock’s performance, and the monthly premiums collected over the two-year period can help offset the capital loss.
The fact that the barrier can be as low as 20% for some certificates may indicate that the issuer is willing to take on more risk to offer higher premiums, which could be attractive to investors seeking higher returns.
Investors should carefully consider the terms and conditions of these certificates, including the potential risks and rewards, before making an investment decision.
It is essential to evaluate the underlying stocks and the overall market conditions before investing in these certificates. They offer a unique investment opportunity.
The ability of the issuer to recall the certificates early, combined with the unconditional fixed premiums, may provide a more attractive investment opportunity for some investors, but it also means that the issuer has more flexibility to manage its risk.
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